Let each of the following matrices M describe a deformation of the x , y plane. For each given M find: the eigenvalues and eigenvectors of the transformation, the matrix C which diagonalizes M and specifies the rotation to new axes x ' , y ' along the eigenvectors, and the matrix D which gives the deformation relative to the new axes. Describe the deformation relative to the new axes. 3 1 1 3
Let each of the following matrices M describe a deformation of the x , y plane. For each given M find: the eigenvalues and eigenvectors of the transformation, the matrix C which diagonalizes M and specifies the rotation to new axes x ' , y ' along the eigenvectors, and the matrix D which gives the deformation relative to the new axes. Describe the deformation relative to the new axes. 3 1 1 3
Let each of the following matrices M describe a deformation of the
x
,
y
plane. For each given M find: the eigenvalues and eigenvectors of the transformation, the matrix C which diagonalizes M and specifies the rotation to new axes
x
'
,
y
'
along the eigenvectors, and the matrix D which gives the deformation relative to the new axes. Describe the deformation relative to the new axes.
Starting with the finished version of Example 6.2, attached, change the decision criterion to "maximize expected utility," using an exponential utility function with risk tolerance $5,000,000. Display certainty equivalents on the tree.
a. Keep doubling the risk tolerance until the company's best strategy is the same as with the EMV criterion—continue with development and then market if successful.
The risk tolerance must reach $ ____________ before the risk averse company acts the same as the EMV-maximizing company.
b. With a risk tolerance of $320,000,000, the company views the optimal strategy as equivalent to receiving a sure $____________ , even though the EMV from the original strategy (with no risk tolerance) is $ ___________ .
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